BERLIN (Bloomberg) -- Volkswagen plans to invest 3.4 billion euros ($4.4 billion) in upgrading its model lineup and factories in Brazil as part of its goal to become the world's biggest carmaker by 2018.
"Brazil is very much a cornerstone of our Strategy 2018," CEO Martin Winterkorn said on Sunday in a statement ahead of the Sao Paulo motor show.
VW's investment plan in Brazil runs through 2016 and includes spending 126 million euros at its component plant in Sao Carlos to expand production to 4,800 engines a day from 3,800 now.
Volkswagen, Europe's largest carmaker, is looking to Brazil to help offset declining demand in its home region.
VW's goals in the South American country are being challenged by U.S. and Asian carmakers, which are likewise expanding in Brazil.
Car sales in Brazil are forecast to grow 8.6 percent this year, according to IHS Automotive.
VW's investment in Brazil will include standardizing factories and installing technology to build cars based on the company's MQB platform, which is the basis for the VW Golf and other models, Michael Macht, VW production chief, said on Sunday at a presentation in Sao Paulo.
"I see enormous potential in Brazil just from the systemic implementation" of parts sharing,'' he said.